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Exit Planning Insights
What is the purpose of a letter of intent (LOI) in a business sale?
February 16, 2025 / in Exit Planning, Sell a Business / by Al Statz
A Letter of Intent (LOI) in a business acquisition serves as a blueprint for the deal by establishing key terms, as well as process and timeline, before moving into due diligence and final agreements. It signals serious intent, based on what is known today, without final commitment. It helps both parties align their expectations and minimize wasted time and costs. Key Purposes of an LOI in Business Acquisitions 1. Establishes Key Deal Terms Defines the …
Beyond price: What matters most when selling your company
January 28, 2025 / in Exit Planning, Sell a Business / by Al Statz
Most of our seller clients go into a sale thinking their highest priority is getting top dollar. And sure, price matters—it’s your financial reward for years of hard work. But many clients learn along the way, that other factors often carry just as much weight—sometimes more. If you want a successful and satisfying sale, look beyond the headline sale price. Strategic Fit: Will the Buyer Honor Your Legacy? The right buyer isn’t just the one …
U.S. Private Equity M&A Activity and 2025 Outlook
January 28, 2025 / in Exit Planning, Sell a Business / by Al Statz
Exit Strategies Group sees 2024 as a turning point for U.S. acquisitions by private equity groups, for both new platform and strategic add-on acquisitions, and we’re optimistic that market conditions will continue to improve in 2025. U.S. M&A activity, particularly in private equity (PE), rebounded strongly in 2024, with deal value rising 19.3% and deal count up 12.8%; fueled by stabilizing inflation, improved credit access, and a more favorable interest rate environment. The hottest sectors …
How important is the management team when selling a business?
January 20, 2025 / in Exit Planning, Sell a Business / by Al Statz
Selling a lower middle-market business involves various factors that can impact the price buyers are willing to pay, the cash amount they offer, and the likelihood of a successful sale. One of the most crucial elements is the strength and stability of the management team and key contributors within the organization. Continuity and Stability A strong management team is essential for ensuring continuity and stability, which are highly attractive to buyers. Investors are more inclined …
M&A Glossary: No-Shop Clause
December 2, 2024 / in Exit Planning, Sell a Business / by Al Statz
Many M&A negotiations include a no-shop clause. This is a period of exclusivity when the seller cannot solicit offers from other parties. The due diligence process is expensive for buyers, so sellers sign these agreements as an act of good faith. Typically, a no-shop clause has a near-term expiration date and is only in effect for a couple of months (45—90 days). Buyers with a lot of leverage, and those working with inexperienced sellers trying …
Scaling for Sale: Growth Strategies that Double as Exit Plans
December 2, 2024 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
As a business owner, you’re likely consumed with the daily challenges of building and growing your business. The question of selling might seem like a distant concern—something to worry about years down the road. But the reality is that planning your exit and growing your business are two sides of the same coin. We’ve been conditioned to think about entrepreneurship in distinct phases: First, you build; then, you grow; finally, you sell or pass it …
From the M&A Glossary: Add-backs
November 20, 2024 / in Business Valuation, Exit Planning / by Al Statz
Add-backs are adjustments made to a company’s financial statements to more accurately reflect its true earning potential and “normalize” its financial performance. These adjustments are typically made to the target company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to create a metric known as “Adjusted” or “Normalized” EBITDA. Add-backs to EBITDA are expenses or income items that are considered definitional, discretionary, non-recurring, one-time, or not essential to the company’s core operations. Common examples of …
From the M&A Glossary: Search Fund
October 10, 2024 / in Exit Planning, Sell a Business / by Exit Strategies
A search fund is an investment vehicle through which an entrepreneur raises capital from investors to fund the search for and eventually the acquisition of a privately-held company. The search fund model allows the entrepreneur to collect a salary while they search for a suitable target company and negotiate a letter of intent and perform due diligence. Once a target company is acquired, the entrepreneur usually takes an active role in managing and growing the business, …
Equity Rollover Benefits
October 8, 2024 / in Exit Planning, Sell a Business / by Exit Strategies
An equity rollover occurs when a business owner sells their company but chooses to reinvest, or “roll over,” a portion of the proceeds into the newly acquired business. An equity rollover allows a shareholder to benefit from any future growth and value creation. In a bolt-on acquisition or consolidation, the owner would likely receive equity in a larger, more diverse and less risky business enterprise. The benefits of an equity rollover for the shareholder include: …
Timing the Sale of Your Founder-Owned Enterprise
September 8, 2024 / in Exit Planning, Sell a Business / by Exit Strategies
For founder- and family-owned businesses, deciding to sell is much more than a financial decision. Its a pivotal moment that marks the culmination of years, often decades, of dedication and hard work. The timing decision involves personal and market factors that can significantly influence the outcome of a sale. Understanding the right moment to sell requires an appreciation of the market environment, the business’s lifecycle, and the personal readiness of the owners. Market Conditions The …
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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